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Conduct Risk – Your Responsibility

One can empathise with the task facing management across the financial services industry, wading through the complexities of designing and deploying a conduct risk framework that is appropriate to their organisation. While consumer protection regulations are numerous, they are definable. Related systems and process can be controlled, monitored and reported upon in a relatively uncomplicated manner. Conversely, conduct risk has evolved as an area of considerable ambiguity. Firms are required to define conduct risk within their own organisation and assess their own conduct risk environment – a risk concept that goes beyond consumer protection and impacts a multitude of areas within an organisation.

Conduct Risk Assessment

A firm can identify its conduct risk environment by reviewing its risk universe and classifying risks as a conduct risk where relevant. This is easier said than done. Conduct risk goes beyond the typical customer facing processes of the business. It includes processes and activities that have an impact on the firm’s conduct in the market place also. Activities such as market abuse regulatory obligations and corporate social responsibility activities are becoming areas to be considered within a firm’s conduct risk universe and so the conduct risk assessment is becoming a task which all areas of an organisation must be a stakeholder in.

Conduct Risk Management

Effective conduct risk management is proactive by nature. Many firms are in a position to record and store rich, interrogable customer data from all stages of the customer journey. Deploying insightful data analytics techniques, potential conduct risk incidents can be foreseen and potentially mitigated before they occur. Insights such as changes in the needs and objectives of the target market, misalignment between product attributes and customer needs and / or identifying products which are not following the envisaged customer journey, are all indicators of potential conduct risk incidents.

Competitive Advantage – Data, Insights, Action

In today’s data driven world, most firms have the required customer data available to gain valuable insights as to how your firm is serving your customer needs. Not using this data in the pursuit of positive customer outcomes could not only draw scrutiny from supervisors and consumer protection bodies but also competitors. With a relatively homogenous portfolio of financial products available across the financial services industry, marketing your firm’s pursuit of positive customer outcomes and effective conduct risk management can be an important tactic for firms in achieving a competitive edge.

Our Services

Grant Thornton can assist you in navigating the conduct risk maze. Often, determining the starting point for designing and implementing a conduct risk framework is the hardest part of the journey. But whether it is advising on a starting point, undertaking a conduct risk assessment for your business, or seeking advice on how to gain insights from all the customer data you have to hand, Grant Thornton has the skills and expertise to support your firm to achieve its conduct objectives.

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